Wednesday, January 20, 2021 - 12:30pm to 2:00pm
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Online Event

The James Hausman Tax Law and Policy Workshop


Michelle Layser
University of Illinois, College of Law

Redevelopment Tax Incentives and Gentrification: A Spatial Analysis

Wednesday January 20, 2021
12:30pm - 2pm
ZOOM meeting

Abstract: Place-based tax incentives, such as the New Markets Tax Credit (NMTC) and Opportunity Zones incentives, areoften used to promote investment in low-income census tracts. Critics fear that when gentrifying neighborhoods are eligible for incentives, they will attract investment away from the neighborhoods that need it most. However, few studies have provided empirical analysis to assess whether these concerns have merit. Through a novel geospatial analysis of the location patterns of tax-subsidized projects, this Article provides new evidence of inequitable distributions of tax credits, which can inhibit their ability to benefit struggling communities. These findings have profound implications for the federal and state NMTC programs, as well as the new Opportunity Zones law. This Article analyzes 15 years of NMTC data to explore location patterns of taxsubsidized investments in 20 U.S. cities. It employs spatial analysis methods to describe the location patterns of investment and their relationship to two variables known to correlate with gentrification: high vacancy rates and increasing rental rates. The results show that NMTC subsidies have disproportionately flowed to eligible census tracts that exhibit signs of gentrification. The observed spatial patterns reflect inefficient allocations, limit the program’s ability to promote equitable change, and cast doubt about whether federal regulators can effectively shape program outcome

Michelle Layser joined the Illinois Law School faculty in fall 2018, teaching partnership taxation, state and local taxation and property law. Before coming to Illinois, Professor Layser spent two years at the Georgetown University Law Center as a Law Research Fellow and Adjunct Professor of Law. Professor Layser has broad research interests at the intersection of tax law and social policy. Major themes in her research include the use of tax expenditures to deliver public goods, often by encouraging partnerships between governments and private actors, and the effect of such tax expenditures on economic inequality. Her current research looks at how tax law is used to encourage private investment in housing and community development. Past works have looked at the unequal taxation of same-sex families, the potential role of non-profits in supporting news production, tax incentives for investment in clean energy technologies, and how tax law rewards residential segregation.

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